The Gulf will also continue to experience impressive economic growth, although at a slightly lower rate than 2006 in all but Oman and Qatar, the IMF said in its Regional Economic Outlook report.
But a de-pegging of the region's currencies from the deteriorating US dollar would not reduce inflation, as price pressures are mostly domestically generated, IMF Middle East and Central Asia chief Mohsen Khan said.
Gas-rich Qatar's inflation will reach 12 percent in 2007, compared to 11.8 percent in 2006, while it will drop to 10 percent in 2008.
In the United Arab Emirates, where housing costs have surged, inflation is estimated to drop from 9.3 percent in 2006 to 8.0 percent in 2007 and 6.4 percent the next year, following an anticipated increased in housing supply.
"It is a question of when the housing units are going to come into the market and what kind of impact they are going to have," Khan said in an interview.
The IMF has opted to split the UAE's consumer price index into two to calculate inflation, separating out rent.
Housing costs in the UAE rose by 16 percent in 2006 compared to a 6 percent increase in everything else with rent inflation expected to drop to 12 percent in 2007 and around six percent in 2008.
"Qatar and the UAE - mainly Dubai - are very similar. Both are growing very rapidly and have large communities of professional expatriates who need an infrastructure of housing, schooling, and so on," Khan said.
All Gulf Cooperation Council (GCC) countries face the rising costs of building materials amid a construction frenzy across the region, as well as a global increase in food prices, he added.
These costs sent Saudi Arabia's traditionally stagnant inflation to a record 2.5 percent in 2006, which is projected to rise to around 3 percent this year and in 2008.
"Inflation above 1 percent was considered in the past a complete anathema in Saudi Arabia ... [But] the 1-percent days are gone," he said.
A surge in infrastructure expenditure, caused by an increase in oil revenues, has driven up inflation in the Gulf region.
Inflation in Bahrain is estimated to remain at 2.9 percent in 2007, and to increase in Oman from 3.2 percent to 3.8 percent, while it will drop from 2.8 percent to 2.6 percent in Kuwait, the IMF said.
Although the currencies of five GCC members are pegged to the weakening dollar, the IMF believes that the decision not to change the fixed exchange rates should not boost inflationary pressures.
"These countries don't believe that inflation is imported. I think they are right ... 70 percent of their imports are priced in dollars ... They don't stand to gain very much" from de-pegging their currencies, Khan said.
"It is very difficult to see what it's costing these countries by holding on to the dollar at the moment," he added, referring to Bahrain, Oman, Qatar, Saudi Arabia, and the UAE.
In May, Kuwait decided to cut its link to the dollar and peg its dinar to a basket of currencies, casting doubt over the future of the council's planned monetary union in 2010.
Khan said that the GCC economies meet all convergence criteria except for inflation, but pointed out the institutional infrastructure for such a union is still not in place and needs time to be established.
The economies of the six members, meanwhile, continue to grow at an impressive rate. Qatar's economy is expected to grow at a whopping 14.2 percent in 2007 and 14.1 percent in 2008.
The Saudi economy, which is the largest in the Middle East, will grow by 4.1 percent and 4.3 percent in 2007 and 2008 respectively, while the UAE - the second largest economy - will grow by 7.7 percent and 6.6 percent.
© 2007 Agence France-Presse
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